Oil Must Benefit Ordinary Ghanaians

Craig Murray

An excerpt from a fascinating blogpost.
China has an active policy of seeking to extend its influence in Africa, at the expense of Western influence. The Kosmos deal, and indeed the development of Ghana’s petrochemical resources, has become mixed up in this. As known to the Western embassies in Accra from their government contacts, rather than Exxon Mobil, the Ghanaian government wishes the stake to go to the Chinese National Offshore Oil Corporation.
That has made international news headlines, as a competition for an African mineral resource that pits China and the USA in head to head conflict. The US Embassy in Accra and the Obama Adminstration certainly see it that way. I suspect the Chinese Embassy do too.
Having just come back from Washington, I would assure you that the Americans are going to be very unhappy with Ghana if Exxon Mobil are blocked by the government, just in order to give it to the Chinese instead. If the Ghanaian government forces the sale to the Chinese for less than the Americans were prepared to pay, that would cause widespread outrage in the international community.
The clue is in what I just wrote: “Competition for an African mineral resource”. Those who kid themselves that either side is in this primarily for altruistic reasons, are easily deceived. Outsiders want African resources; that has been the truth of African contact with the rest of the world for centuries. That is not to say that there is no altruism in the relationship. From the West, I think of it as guilt money for slavery and colonialism. But whatever the motivation, the truth is that Ghana has over the years received hugely more free aid money from the UK and US than it ever has from China – totalling billions of dollars – and that it will do so this year too.
When asked by Ghanaian friends about .the relationship with China. I always tell them that, if offered genuinely free money, they should certainly take it. Equally, if these Chinese buses are reliable (time will tell) and cheap with good credit terms, certainly buy them. But the much vaunted billions in Chinese aid for Ghana is not readily apparent. Have you seen it? There are some football stadia – not a huge economic driver. The Bui project is a soft loan, not a gift, and the capital price is inflated.
Aspects to the Chinese way of doing things come with what aid there is. In particular the importation of low level Chinese labour, including convict labour, rather than giving jobs to local people, and some very unfortunate Chinese attitudes to employee relations and to Africans in general.
The government is working on a plan whereby the Chinese would get Kosmos’ part of the Jubilee field in exchange for building undersea gas pipelines, and the Chinese would also develop the onshore storage facilities, and perhaps refining and downstream industry too.
The problem with this plan is that that the Chinese do not want to pay 4.5 billion dollars upfront for the Kosmos concession. But if not they, who would pay Kosmos? Kosmos can certainly be taxed. Kosmos can within reason be controlled over to whom they sell. But the absolute right which Kosmos must retain is to sell their share at the market price.
The sums of money involved are mind boggling – that a share of less than a quarter in just one field is selling for over 4 billion dollars, shows how the economics of oil will dwarf the rest of the Ghanaian economy. That is why so many companies are anxious to be involved. That goes not just for the production from fields, but for all the downstream activity too. What worries me is that there appears a government determination to hand control of the bulk of Ghana’s nascent hydrocarbon related development to the Chinese, rather than deal on the basis of fair and open competition.
To say that there is a lack of transparency would be an understatement. A convoluted deal with the Chinese over Jubilee, pipelines, processing and downstream is being put together without anyone else being invited to tender. As far as I can see, it would give the Chinese Kosmos’ stake in the Jubilee field, with the Chinese paying much less than it is worth.
I may be wrong. It may well be that the Chinese proposal genuinely involves a huge aid component, or is of high quality and competitively priced. But in that case, they would only benefit from an open process.Click to read more